West Meets East: Japan Develops Professional Property Management. (Pass Port)

Article excerpt

In Japan, real estate has a long and I rich history. Real estate leases existed as far back as the 8th Century, yet, as an industry property management is relatively new, having only been around for 25 years.

Following the financial "big bang" in the early 1990s, Japan pursued global standards for all industries. As a result, in 2000 the property management industry came into being seemingly overnight. Japanese property prices continued to increase until recently when the trend reversed. The general consensus was real estate property would appreciate without the help of professional managers. It was thought if prices did not improve, it was due to specific market conditions, not the management of the property.

Ultimately, the bubble economy collapsed and property prices shifted downward. Under such business conditions, income-reversed-price was advocated to give more weight to the income potential of property management that was aided by the creation of the fixed-term building lease and the deregulation of REIT law. As a result, the importance of property management became apparent. Now, most Japanese real estate businesses believe property management plays an important role in the performance of an asset.

There are no property managers except for a rare few employed at foreign real estate management companies or companies specializing in large commercial properties.

Thus, the Japan Real Estate Management and Human Resources Development Association (JREM), in cooperation with IREM [R], is beginning to develop a formal property management program.

The future of real estate in Japan looks bright. Tokyo is expected to enjoy a healthy office construction boom by 2005. Construction of office skyscrapers will be completed in such areas as those surrounding the Shinagawa station, the old JR marshalling yard and Minaro-ku. Just as in New York, a substantial, albeit temporary, drop in occupancy rates is expected. …